The ongoing challenges faced by publicly-owned mass transit authorities are looming large as federal funding for COVID relief will start drying up in in 2024. Possible solutions to careening over the financial cliffs include raising taxes, raising fares, tapping future casino revenue, and instituting controversial congestion traffic plans.
“Just last week we unveiled our financial plan, it’s a mid-year update where we’re showing five zeroes, five years of no deficits,” said Janno Lieber, chair, CEO, Metropolitan Transportation Authority. The MTA is one of the largest issuers of municipal bonds in the market with roughly $41 billion of outstanding debt.
The comments came during a Thursday webinar produced by the Volcker Alliance on that explored troubled transit agencies in New York, Philadelphia, and California. Lieber touted the New York state legislature’s move to bolster MTA’s operating budget by raising the payroll tax paid by the city’s large corporations, a measure that’s expected to send over a billion dollars flowing into the MTA.
Victor J. Blue/Bloomberg
“The governor also committed a share of what looks to be the first of three casinos in the city of New York,” said Lieber. He also weighed in on MTA’s plan to implement a controversial congestion pricing plan on cars entering the city.
“Congestion pricing is law in the state of New York, it was enacted in 2019,” he said. ”Sometimes if you talk to politicians in New Jersey, it’s ‘Janno Lieber had too many drinks and came up with the idea.'”
The plan was first proposed in 2007 and has already sparked a lawsuit deployed by neighboring politicians in New Jersey. The suit is directed at the U.S. Dept. of Transportation and the Federal Highway Administration for allowing New York to move forward with the measure. Lieber also clarified that congestion funds would go towards the MTA’s capital budget for improvements that include making the system ADA compliant.
Lieber pointed to environmental concerns and the inability of first responders and delivery vehicles to navigate the streets of New York as the impetus for congestion pricing. The plan is projected to generate $1 billion a year with the agency promising to issue up to $15 billion in new revenue-backed paper.
The plan follows similar measures in London and Singapore. Los Angeles is eyeing a similar strategy. MTA also boosted bus and subway fares earlier this month setting a new base rate of $2.90, up from $2.75. The increase is the first jump in eight years.
The Southeastern Pennsylvania Transportation Authority serving the Philadelphia region has the same problems as many other systems, reduced ridership due to COVID that is still staying low in the current hybrid work environment. Leslie Richards, general manager, CEO, SEPTA is looking at the same hard choices that New York is making.
“We’re working very hard on funding opportunities with our state government, with our local governments,” said Richards. “We’re looking to see how we can get matches. On the capital side, we’re looking to see how we can take advantage of all the competitive grants in the federal bill.”
She also addressed the budget hurdle caused by funds that used to flow from the Pennsylvania Turnpike Commission, another transit authority facing its own financial hurdles.
“We were unable to borrow the money that came to us from the state because it came through our Turnpike Authority. They borrowed to get the money to give to us and obviously we can’t borrow on money twice,” she said. New funding that is eligible for issuing debt is now coming from vehicle sales taxes.